By Barbara Kollmeyer
This asset has ‘lulled everybody to sleep,’ but 2028 will be a wake-up call, says Matthew Smith
Gas seems abundant — for now.
Oil prices have gained about 50% this year, as the Iran war stretches into summer with no resolution in sight.
Natural-gas prices, meanwhile, are down 8% so far in 2026 after barely budging in 2025. Our call of the day from the founder and CIO of investment management firm Chronometer Partners, Matthew Smith, warns of a “knife fight” looming for the commodity that is facing a historic supply deficit.
“Natural gas, which is over 40% of U.S. power generation, is imminently going to become the most important fuel in the country,” Smith told the Invest Like the Best podcast. His firm spent 18 months researching the natural-gas landscape, concluding that a shortage is unavoidable by mid to late 2028.
That’s when the U.S. will begin eating into its “working gas storage, which is the nexus of supply and demand in the country,” with higher electricity prices to follow into 2030.
The U.S. has enjoyed plentiful supply since 2010 when shale production came on the scene. It currently exports 15 billion cubic feet (Bcf) a day, out of 110 to 112 Bcf daily production, and is scheduled to export up to 35 Bcf by the end of 2030.
His firm predicts U.S. natural-gas production will climb from 112 bcf to 132 bcf, tops, by the fourth quarter of 2030, but sees a deficit of more than 5bcf per day “before the full force of AI demand.”
Cutting off exports isn’t feasible due to tens of billions in project financing and contracts linked to LNG projects, he said. Extracting more is tricky, as new wells naturally lose pressure over time, and producers need years of build-out to get to that supply, as they face environmental permits and other regulations, he said.
Smith warned of abundant inertia around natural gas being a primary AI power provider. “We think that complacency is going to take us right up to the point where it’s too late,” he said.
The curve for natural-gas prices is flat – they look fairly consistent – which Smith blames on past abundance.
“That’s despite all these AI compute announcements, what all of the companies are doing for their investments, gas has lulled everybody to sleep, but what happens is these structural things start to fall into place in 2027, 2028 and we start to draw meaningfully in the middle of 2028.”
As for how to invest, Smith sees “clear natural-gas producer winners,” such as upstream company Expand Energy (EXE) , which controls some of the highest rock quality – meaning natural gas can be accessed faster and with less expense. Smaller competitor Range Resources (RRC), meanwhile, has “significant room to grow production.”
He also likes some solar assets on the view solar prices will rise along with natural-gas and electricity prices. Well-positioned companies include XPLR Infrastructure (XIFR) and Clearway Energy (CWEN), he said. Sales of solar panels are likely to climb as the only way for consumers to offset higher electricity prices, he added.
As the gas deficit likely gets worse in 2031, 2032 and beyond, “the only viable solution is to build large-scale nuclear as fast as possible, which would mean it needs to come on in 2033 or 2034,” he said. Large-scale companies like Cameco (CA:CCO) can achieve that goal and are better than smaller-scale names. He also flags BWX Technologies (BWXT), which is a primary supplier of nuclear hardware for the U.S. Navy.
Losers, outside of the consumer, include manufacturers of gas turbines such as Caterpillar (CAT) and fuel cell generators such as Bloom Energy (BE), which have ridden the AI infrastructure boom, he said. As natural-gas supply starts to hit a crunch and gets expensive, orders for their products could “slow meaningfully,” he warned.
Hyperscalers could also be hurt, as they currently budget about 10% of their costs for energy, he said. “If you plug in all of this compute and it’s gas-powered and we think gas could double or triple structurally, even without weather, it could end up being 20% or 30% of the cost of compute by 2029,” said Smith.
The markets
U.S. stock futures (ES00) (YM00) (NQ00) are softer, led by tech. Gold (GC00) and silver (SI00) prices are climbing. Oil prices surged on continued U.S..-Iran fighting.
Key asset performance Last 5d 1m YTD 1y S&P 500 7509.2 -0.46% 1.95% 9.70% 19.01% Nasdaq Composite 25,837.21 -1.03% 0.98% 11.17% 23.67% 10-year Treasury 4.639 8.40 24.80 46.70 25.10 Gold 4123.1 1.38% 2.66% -4.83% 21.36% Oil 87.93 9.58% 25.85% 53.16% 34.41% Data: MarketWatch. Treasury yields change expressed in basis points
The buzz
Super Micro Computer stock (SMCI) is soaring after preliminary results showing gross margins set to double.
Alphabet (GOOGL), Tesla (TSLA), Texas Instruments (TXN) and IBM (IBM) will all report after the closing bell.
OpenAI disclosed it’s behind the attack on Hugging Face when its models tried to steal an evaluation test.
In big win for Saudi Arabia, Trump approves landmark nuclear deal.
The chart
The chart from analysts at a geopolitical advisory firm Signum Global Advisors shows the result of a mathematical formula they created to predict the next move from President Donald Trump. Plotting several key pivots from Trump since the Iran war began, finding a 2.3 to 3.4 standard deviation move for him to Trump to act. The bottom line: Trump’s next TACO – “Trump always chickens out” – moment could come around July 26.
Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
Ticker Security name MU Micron NVDA Nvidia SPCX SpaceX SMCI Super Micro Computer TSM Taiwan Semiconductor Manufacturing AMD Advanced Micro Devices AAPL Apple SNDK Sandisk RKLB Rocket Lab MSFT Microsoft
Ants are not for dessert.
-Barbara Kollmeyer
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07-22-26 0712ET
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